Private Equity Masterclass: M1 - Traditional Private Equity: Leveraged Transactions

This practical 2-day module will: Examine the role of traditional PE, real assets and infrastructure PE, private mezzanine financing (PMF), and growth equity in the portfolio Analyse representative transactions and assess the attractiveness of potential transactions in different transaction contexts Illustrate common types and identify classic sources of traditional PE, real assets, infrastructure, PMF and growth equity transactions Examine entry valuation methodologies, including forecasting and modelling Demonstrate how to structure and fund deals Demonstrate how to generate returns through opportunistic entry, improved fundamental performance post-acquisition, use of leverage and performance incentives, and timely exit Profile sources of financing for transactions of different asset classes Examine funds flows and asset ownership changes associated with different products Demonstrate classic post-acquisition operational improvements, such as more disciplined capital spending, reductions in working capital, and performance-related compensation Profile key due diligence issues, including HR due diligence Review exist alternatives, including leveraged recaps, IPOs, and trade sales to a strategic buyers View our 60 Second Interview with the Course Director - Andrew Regan We took the opportunity to ask our expert Course Director a few questions on the current market challenges and how he became involved in this exciting industry. This is what he had to say. Course Summary Alternative assets (AA) have attracted in recent years a considerable amount of attention and enthusiasm for their performance, diversification effects, and growth of assets under management (AUM). Among various alternative asset classes, traditional leveraged private equity and mezzanine finance share numerous characteristics – illiquidity, long-term horizons, and potential for high levels of returns. Infrastructure private equity and real asset investment add diversification plus inflation protection. All these areas can utilise leverage in acquiring the underlying assets. This is Module One of the Private Equity Masterclass Private Equity Masterclass (Modular Course) M2: Real Assets Infrastructure Private Equity M3: Mezzanine Private Equity and Growth Equity Who Should Attend? Private equity professionals Venture capitalists Institutional and family office investors Investment bankers Private wealth and other investment managers Corporate strategic planning and development staff Corporate financiers Corporate M&A teams Placement specialists Accountants Lawyers This masterclass provides delegates with a comprehensive understanding of these “illiquid” alternative asset classes, it will: Examine the role of traditional PE, real assets and infrastructure PE, private mezzanine financing (PMF), and growth equity Analyse representative transactions and assess the attractiveness of potential transactions in different transaction contexts Illustrate common types and identify classic sources of traditional PE, real assets, infrastructure, PMF and growth equity transactions Examine valuation methodologies, including forecasting and modelling Demonstrate how to structure and fund deals Demonstrate how to generate returns through opportunistic entry, improved fundamental performance, use of leverage and performance incentives, and timely exit Profile sources of financing for transactions of different asset classes Examine funds flows and asset ownership changes associated with different products Highlight key issues in transaction execution Attendees will be presented with a comprehensive look at private equity from the standpoint of both: The buy-side, i.e. investors with capital looking to commit it to uncorrelated, historically higher-return, but illiquid investments The sell-side, i.e. intermediaries assisting in the structuring and financing of private equity transactions Methodology The course will include the analysis of several private equity deals and leveraged buyouts, including a series of Asian transactions. A Socratic approach, with active participation and exercises, will be used. Computer-Based Exercises All delegates should bring a laptop loaded with Microsoft Excel 2003 or later to facilitate in-class studies and exercises. FTS-Eligible This programme is approved for listing on the Financial Training Scheme (FTS) Programme Directory and is eligible for FTS claims subject to all eligibility criteria being met. Please note that in no way does this represent an endorsement of the quality of the training provider and programme. Participants are advised to assess the suitability of the programme and its relevance to participants’ business activities or job roles. The FTS is available to eligible entities, at a 50% funding level of programme fees subject to all eligibility criteria being met. FTS claims may only be made for programmes listed on the FTS Programme Directory with the specified validity period. Please refer to www.ibf.org.sg for more information. Please note that this course is only eligible for FTS Funding when registering for all modules.
Module One: Traditional Private Equity: Leveraged Transactions Day 1: Deal sourcing and return generation Fundamental analysis in private equity contexts and valuation Transaction types: LBOs, MBOs, growth equity Target screening Key industry Sector-level characteristics Key firm-level characteristics Business strategy assessment Business mix, growth goals Margin targets Capital investment Agency problems Operating risk management Financial performance assessment The Troika Financial strategy assessment Cash generation and capital use Historical, target and current capital structures Funding modes and sources Financial risk management Does the financial strategy support the business strategy or vice-versa? Post-acquisition sources of value-added Cost economies Improved working capital management Discipline in capital expenditure and similar outlays Monetisation of non-core assets and under utilised assets Forecasts: Debt capacity and future cashflows "Topline" revenue growth rate projections Forecasting margins Forecasting capital expenditures and other capital outlays Forecasting debt service burdens Levered equity cashflows Return requirements and discount rates Target IRRs Other return measures Exit strategies: “Harvesting” returns Strategic buyers Financial buyers Public market exit Leveraged recaps and special dividends Private equity in Europe and Asia Strategic corporate investors Public market funding for highly-leveraged companies Private equity operations of diversified public firms Growth equity Sources of value in private equity Target valuation Valuation methodologies "Entry" pricing vs. Expected "exit" value Net asset value (NAV) Price/Book value Enterprise value/replacement cost Comparable firm multiples Comparable transaction multiples Operational metrics Discounted cashflow approaches Debt capacity and debt/EBITDA ratios Case studies: A potential LBO: Marks & Spencer PLC Weiqiao Textile: LBO and sumof-the-parts analysis Harbin Electric: Going private via LBO MBK Partners roll-up of Taiwanese Banks and Korean Cable TV Day 2: Transaction structure Debt funding Bank and other senior debt Bridge funding Subordinated and other long-term debt finance Securitisation and structured finance Credit analysis and credit ratings Equity-linked debt Mezzanine funding Convertible securities Equity funding Private equity, LBO and venture capital managers Private market Use of funds: Capital structure and returns Debt/Equity mix Equity-linked securities and dilution impacts: Warrants with-debt, convertibles, pay-in-kind securities Transaction process Due diligence, deal documentation and structuring Due diligence highlight: HR due diligence Exit strategies: "Harvesting" returns Strategic buyers Financial buyers Public market exit Risk management in private equity Liability management Case studies: Progress Power: An electricity generation roll-up Morgan Stanley buy-out of Chinese packager HCP Holdings Morgan Stanley LBO of Korean restaurant Franchiser Nolboo Recapitalisation of US supermarket operator Roundys